Asia crisis hits Cathay Pacific

Cathay Pacific Airways said the severe downturn in Asian regional markets has "forced the redundancy" of 760 members of staff, of whom 460 are based in Hong Kong.

The company said that "1997 was a very bad year and 1998 shows little hope of improvement for Cathay Pacific."

Group managing director David Turnbull said in a statement that "just six months ago I would never have thought we would be forced to resort to such painful measures as this.

"For a long time we have worked hard at keeping our cost base under control through actions such as outsourcing, moving functions offshore and investing in more efficient aircraft," Turnbull said.

However, the "depth of this downturn means that we have to act quickly and decisively to improve competitiveness and bring costs back to a level we can sustain," he said.

The company said falling revenues and load factors resulting from struggling regional economies, the high cost of doing business in Hong Kong, the Asian currency crisis and a significant decline in Asian tourism are to blame for the redundancies.

"This is part of a global re-organisation that is intended to turn Cathay Pacific into a sharper, more responsive company," said chairman Peter Sutch.

"Our objective is to streamline our organisation in order to do things better, with more efficiency and economy. Regrettably, staff reductions are one of the things we need to do to achieve that," Sutch said.

Turnbull said the airline needed to continue investing in its product, developing markets and adding new destinations.

"It's going to take some time for Asia to return to previous levels of growth," Turnbull said.

The company said that compensation packages had been developed.

The redundancies, most of which would take place immediately, were from areas that did not have a direct impact on flight operations or customer service delivery, it said.